01.18.12

Well it seems like all LightSquared has left now is an attempt to claim that the US government is biased against it, representing a remarkable turnaround from this time last year, when most people thought that any favoritism was going in the opposite direction. However, it appears that LightSquared’s protests are going to have absolutely no effect, because all of their allegations about how the testing was not “fair and accurate” simply reflect the NTIA’s own mandates for how the testing should be conducted.

We want to do what is necessary so that our recommendations to the FCC regarding cellular and personal/general navigation GPS receivers can be conclusive and final. To that end, I want to make it clear that our recommendations will be based on NTIA standard definitions and methodologies for assessing interference. We will not accept conclusions or analysis based on propagation models and other tools that depart from our standard methodologies.

Of course the “standard definition” as agreed for the June TWG report was 1dB of degradation, and it was only when LightSquared discovered that the June results were unfavorable that they came up (at the last minute) with their alternative proposal of allowing 6dB of interference degradation, which was never accepted by the NTIA.

Secondly, the Sep 9 letter requested that “that the test plan include a retest of the 10 devices that were shown by the TWG testing to be more susceptible to the lower 10 MHz scenario”. Thus it was at Mr. Strickling’s explicit request that the testing “deliberately focused on…devices that were least able to withstand potential interference”.

Finally the tests were “shrouded in secrecy” because they involved technical performance data on individual GPS devices which both the FCC and NTIA agreed to keep confidential. The same procedure was used in the first round of tests in order to avoid data being released on individually identifiable devices and it is far from clear what LightSquared is alleging was done differently this time. Indeed, with the most “susceptible” of the previously tested devices being included in the second round of tests, it would have been necessary to keep the list of tested devices confidential in order to avoid revealing which these “susceptible” devices were.

It therefore seems clear that by LightSquared’s definition Mr. Strickling himself would count as one of the “government end users [who] manipulated the latest round of tests to generate biased results”. That doesn’t seem like a recipe for success when you are asking the NTIA to “objectively re-evaluate this initial round of testing” and ignore the recommendations of the PNT Excom.

LightSquared has communicated its concerns repeatedly to PNT EXCOMM, NPEF and Air Force Space Command throughout this process, both verbally and in correspondence. All of these concerns have been seemingly disregarded. As you are aware, we have also corresponded with your office to make sure you were advised as the process unfolded.

In addition, the letter states that the FAA had “unilaterally decided to suspend any further collaboration” with LightSquared. These two statements are very hard to reconcile with LightSquared’s briefing to investors that the interference issues were “under control”, which was the reason that new investors became involved with the company. As a result, these (and other) investors might now feel that its not only LightSquared’s (currently invisible) CEO who is lacking in credibility. There was certainly a rush for the exits yesterday, with prices on LightSquared’s first lien debt opening with a markdown of ~9 cents to 40-44 cents on the dollar, and then falling further to 38-42 cents during the day.

[...] Other news emerging today is that I’m told the NTIA plans to release its report on the November 2011 testing next week, presumably accompanied by its recommendations to the FCC. It appears that the NTIA will back the PNT Excom recommendations (most likely including that there should be no further testing at this time and that there should instead be a consultation on GPS receiver standards), and it could hardly do otherwise, given that the test procedures criticized by LightSquared were specified by NTIA in the first place. [...]